Suffering Under Improper Banking Practices and Government Monetary Laws
By Michael S. Rozeff, LewRockwell.com
Improper Means of Exchange
Throughout history, humanity has devised various means of exchange—currency, payment methods, and money—that have thrived over time. As Menger noted, one such method arose from the identification of highly marketable commodities, leading to the prominence of precious metals. Another approach involved banks facilitating short-term (90-day) bills of exchange while issuing banknotes, a practice that endured for centuries. In addition, goldsmiths’ deposits at banks in exchange for circulating certificates also played a significant role. Furthermore, governments introduced tax certificates accepted for tax payments, which served as viable means of exchange. It is also worth noting that a diverse range of commodities has functioned as exchange methods.
This is merely a glimpse into the subject. The private economy demonstrates an impressive capacity to generate various means of exchange that effectively address the challenge of facilitating low-cost transactions without resorting to barter. Continue reading
Nerves are frazzled, hands are shaky, and excited fingers are eager to act. “The market needs immediate stimulus!” the crowd calls out.
In today’s climate, it doesn’t take much persuasion to ignite a fervent demand for assistance. The DOW has plummeted 1,258 points from its May 1 peak of 13,359, and, based on the headlines, it seems the next major market panic is looming. Surprisingly, the Federal Reserve finds itself not only tasked with managing the nation’s money supply and supporting full employment but also with ensuring that the stock market remains on an upward trajectory.
“Federal Reserve Chairman Ben Bernanke will return to Capitol Hill on Thursday to address a congressional committee regarding the U.S. economy,” reports Reuters. “He’s in for a challenging session.”
“The blue-chip Dow average is now down for the year, and employment growth appears to be slowing significantly, while Europe is still in turmoil,” continued the report.
“This puts the Fed in a tight spot; they will likely feel obligated to respond,” stated Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York, as data from Friday revealed that U.S. job growth in May was the weakest in a year. Continue reading
Following the long Memorial Day weekend, investors returned with optimism. Once refreshed, they eagerly dove back into the stock market, resulting in a 125-point surge in the DOW that day.
However, by Wednesday, the reality of a looming crisis from Europe set in. Investors shifted their mindset, leading to a 160-point drop in the DOW, erasing Tuesday’s gains. The next day brought uncertainty; investors oscillated between selling and buying, ultimately resulting in a 26-point loss as the DOW closed the day.
The stock market may capture the most attention, but the real movements are occurring in the typically mundane bond market. On Thursday, the yield on the 10-Year Treasury Note fell to 1.53 percent—its lowest level in recent memory, possibly even ever.
At the Economic Prism, we observed this migration away from stocks in awe. In real time, we witnessed fear driving individuals away from one peril only to plunge them into a greater one. Continue reading
Things are heating up in the markets. Just last week offered a captivating mix of comedy and tragedy, outdoing any Hollywood script imaginable. The comedy stemmed from the Facebook IPO’s dismal performance, while the tragedy was eloquently orchestrated by the Greeks.
Yet both narratives revolved around market exploration. The absurdity of the Facebook situation incited laughter as the markets unraveled the true worth of its shares, while tears were shed over the possibility of Greece exiting the Eurozone.
We at the Economic Prism watched with the entranced fascination of a child at the circus. We recognized that the clown on the unicycle was headed for disaster, yet we couldn’t help but stay transfixed.
It has become clear that Facebook shares are overstated at the initial public offering price of $38. In fact, Mark Hulbert, writing for MarketWatch, crunched some numbers and suggested Facebook’s stock should realistically trade around $13.80, which is a staggering 63 percent lower than the IPO price. Continue reading
